Mikroprudentsusest

Mikroprudentsusest is a term referring to the supervision and regulation of individual financial institutions. It focuses on the safety and soundness of each bank or insurance company, ensuring they have adequate capital, liquidity, and risk management practices to withstand financial shocks. This approach complements macroprudential policy, which aims to maintain the stability of the entire financial system.

The goal of microprudential supervision is to prevent the failure of individual firms, which could trigger broader systemic problems. Supervisors assess institutions' business models, governance structures, and compliance with regulations. They conduct stress tests to evaluate how institutions would perform under adverse economic scenarios and require them to hold sufficient capital buffers to absorb potential losses.

Key aspects of microprudential supervision include capital adequacy requirements, such as those set by the Basel Accords, which dictate the minimum amount of capital a bank must hold relative to its risk-weighted assets. Liquidity requirements ensure that institutions can meet their short-term obligations. Furthermore, supervisors monitor credit risk, market risk, operational risk, and other potential threats to an institution's financial health.

Effective microprudential oversight helps to protect depositors and policyholders, maintain public confidence in the financial sector, and contribute to overall economic stability. However, it is recognized that a sole focus on individual firm stability may not always be sufficient to prevent systemic crises, highlighting the importance of integrating microprudential and macroprudential perspectives.